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Wells Fargo Downgrades Macquarie Infrastructure (MIC) to Equal Weight

June 5, 2020 5:18 AM EDT
Get Alerts MIC Hot Sheet
Price: $4.09 --0%

Rating Summary:
    1 Buy, 4 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 5 | Down: 15 | New: 12
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(updating comment/PT)

Wells Fargo analyst Jonathan Reeder downgraded Macquarie Infrastructure (NYSE: MIC) from Overweight to Equal Weight, PT $35.00).

The analyst comments "We believe MIC’s $1.2B of cash on hand, announced quarterly dividend suspension, ability to generate additional cash from the operating subs, operating cost controls and improved balance sheet provide management with the flexibility to ride out the current COVID-19 storm. But with MIC’s share price starting to approach our $35/share SOTP fair value, we see the risk/reward proposition as being much more balanced for what we consider to be a relatively high risk company for our coverage universe with considerable uncertainty related to the path forward regarding the timing, structure and price of a potential sale. Our SOTP valuation could prove conservative if a buyer with a meaningfully lower cost of capital comes along willing to pay a premium based on an ability to (1) more aggressively capitalize/leverage the company, (2) pursue growth opportunities that MIC simply cannot due to capital constraints and/or (3) more efficiently run the operations. However, we believe that upside could be counterbalanced by the potential for meaningful tax leakage under a piecemeal sale strategy.Our $35/share price target is primarily supported by a EV-to-EBITDA sum of the parts (SOTP) analysis."

For an analyst ratings summary and ratings history on Macquarie Infrastructure click here. For more ratings news on Macquarie Infrastructure click here.

Shares of Macquarie Infrastructure closed at $30.65 yesterday.


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